Question of the Day

Whose side of the story do you believe?

July 28—JANESVILLE — A new building housing a metal fabrication company that promises to bring 90 jobs to Janesville will be finished by the end of the year, now that the city council has approved tax increment financing agreements with two companies.

The deals approved Monday, worth about $2.5 million in tax incentives, will relocate the company, A.M. Castle, to Janesville as it closes operations in the Chicago and Twin Cities areas.

“I think this is a really exciting endeavor, especially when we can take business from Illinois,” council member Sam Liebert said. “I look forward to watching that building go up fast.”

The council approved the deals unanimously, with Liebert and President Douglas Marklein stating they were happy to see that future employees would be paid about $15 per hour.

The 208,000-square-foot facility will be owned by 3800 Enterprise, Inc., a local, recently formed development company. The company is named for the space where the building will be located, 3800 Enterprise Drive.

The space will be leased to A.M. Castle, a publicly traded company that has experienced financial trouble in recent years. It’s headquartered in Oak Brook, Illinois, and has operations throughout North America, Europe and Asia.

The deal for 3800 Enterprise includes:

—The city handing over 22.7 acres of land valued at $502,200 to build a 208,000-square-foot manufacturing facility. With the facility, the property’s value would increase to $10.5 million.

—The city providing a $1.7 million forgivable loan for the construction of the facility.

—An annual property tax payment of $250,700 by 3800 Enterprise for the 22.7 acres in question after the building is constructed.

The deal for A.M. Castle includes:

—Creating 90 jobs over the first two years of operation and maintaining them for 10 years.

—A pay-as-you-go incentive from the city totaling $337,000. The money would be paid annually over 10 years. If A.M. Castle prematurely closed its operations, the annual payments would stop. If the company failed to produce 90 jobs within that time frame, it would receive $370 less for every job short of 90.

Gale Price, Janesville’s economic development director, said his office recommended the pay-as-you-go approach with A.M. Castle because of recent turbulence within the company.

According to news releases, the company has shuffled leadership positions since spring, with new faces taking over at the CEO and board of directors levels. The company also formed a finance committee and restructured its executive management.

A.M. Castle plans to consolidate up to 10 of its facilities by early 2016, according to a news release.

The company reported net sales of $979.8 million in 2014, down from $1.05 billion in 2013, according to a news release. Its credit rating was also downgraded by Moody’s Investors Service each of the last two years due to market share loss, inconsistent demand for its products and other factors.

“We do believe they’ll be successful in their reorganization, but the city has a responsibility to protect its citizens,” Price said, referring to the pay-as-you-go incentive structure.

Several members of the board acknowledged A.M. Castle’s recent trouble. But Price said he told them that if the company vacated the building, the facility would be attractive enough to lure in another tenant within six to eight months.

“It’s a higher, more-substantially built building,” Price said. “It’s thicker floors; it’s designed to carry heavier loads, have overhead cranes. When you think about reuse of the building, this is an optimal size.”

Preliminary work on the building’s construction was already underway before the council convened Monday. Price said that risk was taken on by 3800 Enterprise.

“We’re moving full-steam ahead,” said Allisen Lasse, a minority partner with the company. “We have few loose ends to tie up.”

Price said 3800 Enterprise comprises three main investors: Tom Lasse, Norman Weitzel and Todd Bogner. They formed the company earlier this year, he said.